Why Your Next Marketing Dollar Should Be Spent on Amazon
The golden question for any omni-channel DTC brand: Where should your next marketing dollar go to get the best return?
Every digital platform has its perks. Directing customers to your DTC site lets you capture that critical email address for future marketing. Plus, Amazon charges a hefty 15% referral fee on every sale! 😡 So why on earth would you spend your precious marketing dollars there?
Here’s why: Amazon has insane purchase intent and conversion rates. For an established brand in the CPG space, advertising at the top of a relevant, high-volume keyword can net a 15-25% conversion rate! That’s not a typo. Across multiple CPG brands, about 1 in 5 shoppers typically convert on prospecting campaigns. However, CPCs to land those top of search positions on those keywords often exceed $3-5 at a minimum 😳.
For many CPG brands, prospecting on Amazon Sponsored Ads will net the best new customer ROAS of any channel - and typically by enough of a margin to overcome the loss of customer email + referral fee – especially when pushing them to subscribe and save.
But what about non-CPG brands or higher-ticket items? Higher-priced products usually have a lower CVR, but even $60-80+ items can see a 15-20% CVR if competitively priced. Products less likely to be repeat purchases often have lower click costs too.
Still, acquiring new customers via DTC seems better since you can remarket to them, right? True, from a risk mitigation standpoint. But 👏 don’t 👏 sleep 👏 on 👏 Amazon 👏 organic. Ranking high for your prospecting terms on Amazon can lead to big returns without additional spend. In some niches, brands even take heavy losses to gain that precious ranking: How Zulay Kitchen lost $327K.
Across dozens of audits we’ve completed of brands’ Amazon advertising suites, we’ve rarely seen a brand whose next marketing dollar wouldn’t be best spent on Amazon prospecting. Yet, many brands continue to drive their Amazon ad dollars towards over-efficiency via automation, and ignore the incredible growth potential of the platform. Through appropriate segmentation and targeting, Amazon’s Sponsored Ads should be your most efficient new customer acquisition channel.
